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FTC Disconnecting Telemarketing

October 2008, F&I and Showroom - Feature

by Michael Benoit

Dealers have all kinds of technology available these days to help them increase profitability, operate more efficiently, and generally make their lives easier. Like anything else, technology can come with legal baggage, and care must be taken to avoid an unintended compliance violation.

The Federal Trade Commission (FTC) recently announced final amendments to its Telemarketing Sales Rule (TSR), impacting the regulation of prerecorded message telemarketing. The net result is that prerecorded telemarketing calls are broadly prohibited unless the recipient of the call has provided signed and written consent to receive such calls. Most notably, the amendments eliminate your ability to rely on an established business relationship between you and the recipient of the call as valid consent. This will impact the use of prerecorded messages in your marketing efforts to remind customers that it’s time to come in for a service call or to announce a dealership event.

In order to use prerecorded messages in your telemarketing activities, you’ll need a few things from a compliance perspective. First, you’ll need to obtain the written consent of the party to be called. The consent must clearly and conspicuously disclose that the purpose of the consent is to authorize you to place prerecorded calls to the consenting party, and it must be signed by the consenting party and contain his or her phone number. You may not require the consent to be executed as a condition of purchasing any good or service.

Once you’ve obtained the written consent, all prerecorded calls to consenting parties must include an automated opt-out mechanism at the outset. This mechanism must be a key press or voice-activated system. Your calling system must terminate the prerecorded message call immediately after a call recipient uses the opt-out mechanism. The message must also promptly disclose a toll-free number that parties may call to place a do-not-call request, which must allow the parties to connect directly to an automated key press or voice-activated opt-out mechanism. These two forms of opt-out reflect the fact that this regulation applies to prerecorded telemarketing calls answered by a live consumer, an answering machine, or a voicemail service.

There are multiple effective dates for the various components of the amended TSR.

December 1, 2008: All prerecorded telemarketing calls must include the automated opt-out mechanism at the outset of the message.

September 1, 2009: All prerecorded telemarketing calls are prohibited without the call recipient’s signed, written consent. This means you may continue to place prerecorded sales calls based on an established business relationship rather than express written consent until Sept. 1, 2009, provided that these messages otherwise comply with the amended TSR.

The FTC also amended the measurement protocols that come into play if you use automated dialers. That amendment is effective Oct. 1, 2008.

Not all dealers use prerecorded call technology, but it is becoming more prevalent and some find it effective for promoting commerce. Others apparently don’t — if it seems to you that the FTC is trying to discourage these calls through these new rules, chances are you’re right.

Michael Benoit is a partner in the Washington, D.C., office of Hudson Cook LLP. He is a frequent speaker and writer on a variety of consumer credit topics. He can be reached at [email protected]. Nothing in this article is intended to be legal advice and should not be taken as such. All legal questions should be addressed to competent counsel.

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